Sovereign issuers may crowd corporates out in January bond sales

The ECB is barely half way through raising rates. Quantitative tightening will further raise the cost of debt in 2023, and is set to test bond market capacity.

The first two weeks of January are normally the busiest of the year in debt capital markets, as sovereigns, supranationals, agencies, banks and even corporates all attempt to jump-start their annual funding programmes with big new issues.

Investors normally have a lot of money to put to work. But this time, it could be tricky in Europe. Buyers had been getting a little over their skis in the run-up to the ECB meeting on December 15, hoping that, like the US Federal Reserve, it might hint at a coming slow-down in interest rate rises as they approach their peak.

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